Beyond Dutch Disease: Are there mediators of the mining-tourism nexus?

Abstract

In recent years, significant work has emerged exploring the relationship between tourism and mining. Generally, the relationship is considered to be negative, the result of crowding out of tourism during mining booms. However, the relationship is likely to be more complicated with mining affecting tourism both directly and indirectly. The indirect effects arise from the mediation role played by foreign direct investment (FDI), governance quality, trade and the real exchange rate. To verify this hypothesis, this article uses an unbalanced panel data set that covers 190 countries over the 2002–2017 period. A structural equation model is used to account for the mediating relationships. The results show a direct negative relationship between natural resource intensity and international tourist arrivals, as well as indirect positive relationship mediated by FDI partially offset by an indirect negative relationship mediated by governance.